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The holiday weekend includes a few time commitments, so here then is an online post version of NFTRH, in which I can get to the points more directly.

Summary of the Current Macro Market Environment

Stock Markets

  • A bear market in stocks is still in force but some US indexes and global stock markets are putting the screws to the bears. These include defensives like Healthcare and Consumer Staples along with ‘reflation’ markets like Materials, Industrials and Financials, which are all above their 200 day moving averages and each of which have not only taken out the 200 day averages but have, with the exception of Staples, made a higher high to the August highs.
  • Given the seasonal aspects, this stresses the bear case. If the S&P 500 plays catch up and Tech/Semi get relative strength later in the rally (assuming it continues through the whole Q4-Q1 seasonal) it could get downright obnoxious for a bear convinced of the oncoming recession.
  • This is the seasonal play we’ve been discussing, which included lift off from extreme over-bearish sentiment (no longer the case as sentiment is neutral at best for a contrarian bull view), bullish historical data averages after US mid-term election cycles and of course, the stock market’s normal seasonal averages, which bottom in October and bias bullish into mid-February on average.
  • SPX is right now at a ‘logical’ limit at the SMA 200, as is Semi per this update. Tech is still relatively weak and at NDX 11756, well below the SMA 200 (12594).

I have expressed previously how I’ve had a good knack over the years for getting ‘contrarian’ bullish as the right times (most recently due to the oncoming factors for Q4-Q1 as noted above) and then not holding firmly bullish as markets rotate and shift toward risk as relieved casino patrons take over and drive markets to speculative excess once again. A disreputable financial advisor and former extended family member once said to me “Gary, I think you know too much” as a way of saying ‘just shut your brain off and hold stocks for the long-term’.

Sadly, that philosophy has made him millions in commissioned income as he keeps his clients all in on risk. And that view has proven 100% correct over the cycles as the Fed has always been there to bail the mess out at every bust phase in the boom/bust cycle (most recent policy panic being Q1, 2020).

Status of the Hawking Fed

We have been noting that the Fed was tardy in its inflationary mop up. Last February this post included the chart below (as it existed back then), which demanded action by the tardy Fed, which to that point had been trying to live down its ‘inflation is transitory’ bullshit.

We knew the Fed was going to hawk because we knew that the bond market was insisting they do so and by April Jerome Powell had donned his hawk suit and begun jawboning that way in earnest.

If you have not listened to this presentation by David Rosenberg, you might want to check it out. Whether right or wrong about a coming deflation, it’s well worth consideration. As you know, my view for H1, 2023 is disinflationary/deflationary.

The Main Plan

One possibility for financial markets, and indeed my favored view, is that a strong relief rally (well in progress) anticipates a softening Fed as inflation measures roll over (in progress). In poetic fashion, that which caved under the hawkish weight of a now adversarial Fed would celebrate the neutralization of that adversary.

The above describes a Goldilocks scenario. It could be brief, with an end point in Q1, 2023 or at most, H1, 2023. That is because a demand led economy is not likely any time soon with consumer sentiment, continuing jobless claims, mortgage applications and other aspects fading under the weight of the hawkish policy regime to date.

It is not hard to envision market sentiment zooming to briskly over-bullish as more data come in implying a moderation and eventual end to the hawk regime. But the economy was inflated right before our eyes in 2020 and the entity that put so much into inflating/reflating it has been going the other way for much of 2022.

So the plan is to watch for a pivot point when Goldilocks players voice a collective ‘ruh roh!’ if/as inflation expectations drop, drop some more and drop until the situation becomes uncomfortable. At such a point the little Goldilocks froggies in the pot will be fully cooked, just as inflationist froggies are getting boiled currently.

This phase, whether it ended on Friday, will end in Q1, 2023 or possibly even H1, 2023, is not going to be sustainable. Patrons have been brainwashed to the inflation side of the boat and they don’t just jerk over to the other side overnight. But as disinflation transitions to uncomfortably low inflation, aka a deflation scare, the 2023 mania could be a swing to the opposite condition of the 2021-2022 mania. Think about how compact the period was from the deflationary terror fest of early 2020 to the inflationary hysterics that cropped up later in 2020 and endured well into 2022.

The Fed and Keynesian economic/monetary policies in general – in my biased opinion – have created one of those amusement park rides that really whips patrons around. Whether its a massive roller coaster or one of those high speed spinning and twisting rides, it’s a boom/bust cycle that appears to be compacting its time frames and intensifying the power of those cycles.

Bottom Line

For now speculation is in play and it is not driven by macro considerations like money supply or inflationary policy in general. The creator of the bull market leg that began in 2020 is now removing those stimulants because as I’ve stated from the beginning (not only this year, but in essence all of my market writing life) the Fed will not allow itself to be incinerated by out of control inflation. This group of eggheads thought it could micro manage a recovery cycle out of the 2020 economic and market disaster. Its tool was inflation and that tool came back to bite them.

Risk/reward is not what it was back in October as sentiment has lurched toward over-bullish, as we knew it would with any kind of decent relief rally activity. Dumb money indicators are eating the market and Smart ones are fading it. Speculate as you will, but realize that it is speculation, not investment as long as the market is running on sentiment (with degrading fundamentals).

From Sentimentrader

Precious Metals

More often than not, gold stocks (HUI) have been trading with the anti-USD ‘inflation trades’ in commodities, resources and associated stocks. Let’s not beat the wrongheadedness of inflationist gold (stock) bugs to death, but let’s continue to realize that a gold mining operation will benefit when the product (gold) out-performs cost inputs (e.g. cyclical, inflation sensitive crude oil and materials). A gold mining investment thesis among the mainstream will benefit when gold out-performs stock markets.

We await a pivot to a condition which, if the 2023 view discussed above comes about, will be disinflationary/deflationary and would see gold rise if not so much (or at all) in nominal terms, then in terms of commodities and stocks (a measure of gold’s ‘real’ price). If nominal gold were to improbably gain a bid against deflationary pressure, so much the better for the miners. I’ve seen stranger things in the markets than gold acting as a liquidity magnet during a broad market meltdown.

To boot, the precious metals have corrected for well over 2 years and 1.5 years before the stock market began to bear. I think that means something (like the PMs lead by a country mile and they would likely lead again when projecting the next Fed easing cycle). But if the deflationary view is correct, it would likely be volatile before the next bull cycle becomes obvious. This is just me looking into 2023 and thinking aloud. Let’s just have balance and patience as the picture clears.

Before a fundamentally pure backdrop can benefit gold stock prices we’d need to see the last of the inflation bugs taken out. With even the dimmest of the herds now seeing declining inflation indicators I’d expect that many have sold. A critical mass of them? I just don’t know. But if the deflationary view is correct for next year, it’ll come if it’s not already here.

While it may seem frustrating that gold’s ratios to stocks are quite unimpressive, it actually makes sense with the interim Goldilocks theme. The Q4-Q1 interim play has been about hope for the future with a softening Fed. The Fed would soften due to a fade in public enemy #1, inflation. With gold still thought of as an inflation vehicle by many, it is normal that it would not out-perform stocks in a brief Goldilocks phase.

But check out Gold/CRB and especially Gold/Oil, which is making a new high for this cycle. That is notable and will be very important to the gold mining fundamental case if it is real (and given that we’ve viewed the ratio as bottoming, I don’t see why it’s not real).

Aside from that important ratio, gold in relation to the inflation expectations gauge is still in bounce mode, and Gold/Industrial Metals may be breaking the consolidation channel to the upside.

All in all, it’s normal and good work for these macro pictures. What’s going on in Gold/SPX is normal (for this seasonal period) and what’s going on in Gold/Oil is very constructive as it appears now.

Gold (daily chart) held initial support to end the week, which keeps it in the ballgame with respect to its potential to once again attack lateral resistance and the SMA 200.

Silver did likewise, holding the top of the bottoming pattern as support. As belabored previously, 22.57 is the key level to take out in order to potentially send silver to the next objective, which would be 24.50. Per the trade log, I added PSLV as a way to be long silver (aside from a small physical holding left over after the 2011 sale of larger holdings).

The HUI index continues to eyeball 240, which is lateral resistance and the SMA 200.

HUI/Gold ratio is still in fine shape on the daily chart. As long as HUI continues to lead gold we have a beneath the surface indication that should be positive for the precious metals and obviously, their miners. Also, despite a whiff of Goldilocks in the air the miners are leading the broad SPX since early September. Not bad.

One day if/when Goldilocks morphs from a pleasant disinflation to a deflation scare the miners could get corrected again, but that would be a buying opportunity on a sector that would leverage such a monetary/economic (deflationary/counter-cyclical) backdrop to the surprise of many. That’s what we are trying for; to be among the few who will not be running with herds of group-thinkers in 2023.

In short, despite cries of deflation and a potentially capped gold price, gold’s relative pricing could skyrocket as it did in Q4, 2008 for example, when nominal gold dropped but relative gold (to commodities and stocks) exploded to the upside. What an epic buy that was. As proven in hindsight after the inflation bugs had been run out of the picture on the crash.

I am not going to chart individual miners in this posted report, but my personal favored items are, in no particular order, MAI.V (MAIFF), AEM, ORLA, OGN.V (OGNRF), WDO.TO (WDOFF). I also hold SILV and HL and have the usual suspects on watch (GOLD, BTG, NEM, SSRM, KGC, NGD, etc.). I’ll also keep an eye on a speculation or two, although the primary ones, MAG and SBB.TO (SGSVF) have broken down the barn door and run above the SMA 200 and could be good guides for others if they persist bullish.

Bottom Line

The process of pivoting the macro to a positive gold mining tailwind is still happening. Most recently gold’s ratios to commodities and inflation have taken a jump while logically, its ratios to stock markets have eased with the little Goldilocks (inflation cooling with hopes of a softening Fed) backdrop not surprisingly bringing psychological relief to huddled herds of previously bearish casino patrons.

When economic and inflation signals cool enough to elevate concern about the economy that should change. Target: Q1 or H1, 2023.


  • CRB and its tracker DBC are suspect at best below both the SMA 50 and SMA 200, with the SMA 50 indicating an intact intermediate downtrend.
  • Copper and industrial metals got hammered hard after nearing their downtrending 200 day moving averages. Copper for example got banged from 3.96 to 3.55 and is bouncing from that support area around the SMA 50 (3.51). It remains to be seen if this bounce can bring back the happy stuff for a seasonal pump but personally, I have no current interest.
  • Palladium is bearish, having bounced to the SMA 200 and dropped anew back below the SMA 50. Platinum continues to be technically constructive, much like silver. It dropped to test lateral support last week at 970, above both the SMA 50 (937) and SMA 200 (946).
  • Crude oil ticked new lows for the correction cycle last week. The intermediate trend (SMA 50) is down and the larger trend (SMA 200) is in danger of turning down if oil does not find relief soon. Here is a beautiful picture if you’re a gold (mining) bug…
  • Natural Gas busted above its moving averages and while the intermediate trend (SMA 50) is suspect the major trend (SMA 200) is still up and the price is back above it. That should be respected, even by the likes of your letter writer, who wants to be an Energy bear until well into 2023. Here is the daily chart showing the move, which got reversed at clear lateral resistance. Still, it keeps AR, which I sold on the pop last week, on my watch list.
  • Side note: the seasonal (on a 30yr average) for Gas turns down in December and drops through February.
  • The Uranium sector continues to lumber sideways in a not too attractive fashion. Of course with this and so many other commodities, unattractive can become lovely with one burst of speculative (read: hedge fund) buying. For now I am just watching, but favored items like NXE, UUUU, CCJ and especially URNM may be added if I get a glimmer. IMO Uranium has a very positive long-term view.
  • Lithium stocks got hammered on Friday. I thought about buying LTHM and/or ALB and then did nothing. They need to stop declining right here or they will break down. They’re on watch.
  • Agricultural as a whole (GKX index) is not looking positive, and is in roll over mode on a daily chart. No current interest, but that could change for one or two we have shown to have positive seasonals into next summer.


horsemenI insert the 2 Horsemen of the Apocalypse to make a visual point that when the US dollar is rising and the Gold/Silver ratio (GSR) is also rising the implication is usually disinflationary to deflationary as market liquidity evaporates.

These two seized upon the Fed’s removal of liquidity and indicated troubles for markets and eventually, the economy.

But now… USD followed an already weakening GSR and broke from its intermediate uptrend marker (SMA 50) for a test of its major uptrend marker, the SMA 200. With this, unsurprisingly, has come the anticipated market relief during the ‘Q4’ part of our Q4-Q1 market relief projection.

The questions now become how long before before USD and GSR recover, or will USD and GSR recover any time soon? Why on earth are commodities bearish and inflation expectations rolling over with a weak combo of USD and GSR? Well for one thing, as we often noted in real time in 2021, a rising USD came in tandem with the ramp up in inflation hysteria. So why not the opposite now?

  • USD and GSR may have completed the job of liquidity destruction before rolling over well ahead of lagging indicators to the last inflation giving way and the public becoming aware that’s it’s yesterday’s news.
  • Or maybe my current analysis is getting played like a fiddle as the real problem – a virulent inflation that flicks off the hawking Fed like a little gnat on its shoulder – resumes. Got to stay open minded.
  • But again, USD and GSR turned up well before the worst of the inflation hysteria and as we noted, were a negative divergence to it for much of 2021 and 2022. They could already be prepping for a negative divergence to a coming deflation scare, looking ahead to the Fed softening for real, or…
  • USD could hold key support at 105, see the GSR get its act together and they both rip the macro relief party a new one.
  • As has been the case for much of this year, an eye on the relationship between gold and silver should be helpful in determining what’s ahead. But also do not discount how important USD’s major trend marker, the SMA 200, is as it gets tested here.

Moving on, here is the major global currency view (daily chart) showing the Swiss Franc (CHF) still constructive to break its downtrend. If that works, then gold will have an ally because CHF/USD and gold have tended to be positively correlated much more often than not over the years.

Everybody else is on a similar relief bounce as US and global stock markets. Makes sense. If USD breaks down then its bear would be the bull of other currencies against which it is measured. But with USD still above its SMA 200, let’s tap the breaks on that prospect for now.

Finally, the weekly BTC/USD chart shows initial support lost and if Crypto is real and enduring as a form of decentralized money (something I am personally far from sure of) the buy area is and has been 10k to 12.5k.


Savings Account: Cash & equivalents, balanced by gold.

Trading Account: No active positions. Cash & equiv.

Roth IRA (non-taxable, no contributions):

IRA is 87% cash and equivalents. That’s more exposure than conservative me would want in a high risk environment. But speculative risk taker me feels it’s about right. As long as I feel the seasonal sentiment rally is in play, I’ll speculate a bit. The current mix does include a short position (Energy), so there’s that.

I am not viewing the gold miners as a speculation for 2023, but if they are sucked into the speculative relief rally vortex they’d need to be treated as such in the shorter-term. In short, profit taking is legal and it can be taken from anywhere under certain market circumstances. Otherwise, I am open to continuing to build out a longer-term portfolio of quality gold stocks. Up to you, Mr. Market.

Cash & income-paying Equivalents are at levels that are right for me and my real-world situation. Your situation is different. Cash will be adjusted as needed.

Refer to the Trade Log under the NFTRH Premium menu at for trade info, if interested (not that you necessarily should be). Also, you can follow at Twitter @NFTRHgt for notice of Updates.

NFTRH is not to be distributed to third parties without prior written consent

Notes From the Rabbit Hole (NFTRH) is a weekly market report in which we provide analysis on financial markets.  We make every effort to provide accurate and high quality content, but this analysis ultimately represents our opinions and these opinions are provided without warranty or guarantee of any kind.  In no event will or its owner, Gary Tanashian, be liable for any decision made or action taken by you based upon the information provided in NFTRH or at ToS available for review using the menu above.